(Stresa) The big financiers of the G7 meeting in Stresa in Italy announced on Saturday “progress” in their talks on the use of interests in frozen Russian assets, laying the foundations for an agreement in mid-June at the summit of leaders of state and government.
“Progress has been made,” commented the host of the meeting, Italian Economy Minister Giancarlo Giorgetti, welcoming “the strong political position” of all the G7 countries.
“The agreement reached is a political agreement,” declared Mr. Giorgetti, recognizing however that there remained “important technical and legal issues” to be resolved between now and the summit of leaders of the G7 countries in Puglia.
“We are making progress in our discussions on potential ways to anticipate extraordinary profits from Russian sovereign assets tied up for the benefit of Ukraine, in accordance with international law and our respective legal systems,” the ministers said in their final statement.
The objective, according to them, is “to present to our leaders, before the summit in Puglia in June, options to provide additional financial support to Ukraine”.
“We are moving in the right direction,” said Ukrainian Finance Minister Serguiï Marchenko, interviewed by AFP. “I hope that during the leaders’ summit in June a decision will be taken,” added the minister who attended the G7 session devoted to Ukraine.
“The G7 appears to be moving closer to an agreement to use a substantial portion of Russian money to pay for Russia’s war of national destruction against Ukraine,” commented the Atlantic Council think tank. “Even if it is not enough, it is a big step and it must be done quickly.”
However, G7 ministers did not agree on a specific amount or mechanism to raise funds for Ukraine from future interest generated by the 300 billion euros of assets of the Central Bank of Russia frozen by the G7 and Europe.
These assets are mainly found in the European Union because 185 billion euros were frozen by Euroclear, an international fund deposit organization established in Belgium.
“Firm determination”
The countries of the European Union took a first step by adopting an agreement in early May to seize income from Russia’s frozen assets in order to arm Ukraine, a windfall representing between 2.5 and 3 billion euros. per year.
The United States, however, wants to go further and has put pressure on the G7 countries to rally around a mega-loan of around $50 billion guaranteed by future interest generated by immobilized Russian assets.
But many questions to be clarified persist, such as the sharing of risk between the United States and Europe, the unknown of the evolution of interest rates or even the fact of knowing who will issue the debt.
And an agreement on an amount of this magnitude still seems far away.
PHOTO GABRIEL BOUYS, AGENCE FRANCE-PRESSE
Italian Economy Minister Giancarlo Giorgetti
Mr. Giorgetti, however, was confident about the chances of reaching an agreement at the G7 Summit: “There is a firm determination to find a solution”, “we must be optimistic” and “not give up in the face of to difficulties”.
In addition to the United States and Italy, which chairs the group this year, the G7 includes Japan, Canada, Great Britain, France and Germany.
The big money makers reaffirmed that Russia’s sovereign assets “will remain tied up until Russia pays for the damage it has caused to Ukraine.”
Hence the prospect that Russian assets can generate profits for a long time to come.
“Increase sanctions against Moscow”
The idea of Joe Biden’s administration is also to ensure lasting aid to Ukraine before a possible return of Donald Trump to the White House, after the November presidential election.
The United States proposed in February that the G7 countries simply seize the frozen assets, an idea which they then abandoned due to the reluctance of their allies, worried about the creation of a dangerous legal precedent and reprisals from Russia.
Russian President Vladimir Putin has already taken action by signing a decree on Thursday authorizing the confiscation in Russia of assets belonging to the United States or to people “associated” with it.
The G7 ministers also said they were “determined to increase financial and economic sanctions” against Moscow.
The G7 is thus “ready to impose sanctions on individuals and entities that help Russia acquire advanced materials, technologies and equipment for its military-industrial base.”
Bank of Italy Governor Fabio Panetta said Italian banks should leave Russia, even if it proves complicated and costly.
“Knowing that you are forced to find a buyer can be difficult, but at the end of the day you have to get out of there because there is also a reputation issue,” he said.
Finally, trade tensions with China have led the G7 to “consider taking measures” in the face of Beijing’s “overcapacity” production, which is flooding Western markets with low-priced subsidized products.